General Motors Is Sued By Arizona For $3 Billion Over Recalls

Arizona has filed suit against General Motors, claiming that the automaker defrauded the state’s consumers of an estimated $3 billion. The suit is being described as the first major legal action against GM over its record number of recalls this year. It’s alleged in the complaint that the automaker intentionally misled consumers through its advertising, website and public statements. The suit says that some of GM’s top leaders were complicit in the alleged misdeeds. The Attorney General says in the suit that “New GM,” the term used for the company that emerged from bankruptcy in 2009, “was not born innocent.” The complaint said further:

It is difficult to find a brand whose reputation has taken as great a beating as has the New G.M. brand starting in February 2014 when the first ignition-switch recall occurred.

In filing suit, Arizona has broken from a group of 48 state attorneys general who have has been pursuing a multistate investigation into GM for its handling of the ignition-switch defect. Attorney General Thomas C. Horne had been on the executive committee of that multistate inquiry, led by South Carolina and Ohio. He had this to say:

We’re proceeding with our own suit because it’s the best way to protect the citizens of Arizona. General Motors represented that it was taking care of the safety of its cars, and in fact there were serious defects that it did not disclose to the public for years.

The complaint offers precise calculations of the losses suffered by owners of GM vehicles, and suggests that “no reasonable consumer” would now buy a GM vehicle for the same price had “the brand continued to mean safety and success.” It was alleged that GM “manufactured and sold millions of vehicles that were not safe, including hundreds of thousands in Arizona, and it failed to remedy serious defects in millions of older GM-branded vehicles.” As examples, the Attorney General calculated that the 2010 and 2011 models of the Chevrolet Camaro had lost $2,000 in value, and the 2009 Pontiac Solstice had lost $2,900. The Arizona consumer penalty statute stipulates $10,000 per violation, which potentially could result in a $3 billion recovery for the state.